31 January 2018

Increased deal activity in natural resources market, reports Carey Olsen

A number of significant natural resources transactions in the latter part of last year are representative of an upshift in deal activity across the sector, according to M&A specialist Tony Lane of offshore law firm Carey Olsen.

Mr Lane, a partner in Carey Olsen's Guernsey corporate team, has advised Bushveld Minerals Limited (Bushveld), Avnel Gold Mining Limited and Sandstorm Gold Ltd on recent deals, while Clinton Hempel, managing partner of Carey Olsen's BVI office, advised Cora Gold on its recent listing on the London Stock Exchange's (LSE) AIM Market.

Mr Lane said: "There appears to be a growing appetite amongst those operating within the natural resources sector to consider deals at this present time. A rebound in commodity prices, after a number of years of low prices, appears to have generated an increased appetite in the equity markets for mining stocks. That is leading to increased levels of confidence in the sector and is making it easier for mining companies to make strategic acquisitions," said Mr Lane.

"The fact that Carey Olsen's listings and M&A teams have been involved in transactions of this type demonstrates the firm's market leading expertise in advising listed resources companies registered offshore."

The Bushveld deal, which completed on 21 December 2017, saw the AIM-listed mineral project developer acquire 55% of Bushveld Vametco, Limited (Vametco) for $12.3 million from Yellow Dragon Holdings Limited – giving Bushveld ownership of 100% of the issued shared capital of Vametco, a significant player in the global vanadium market.

Carey Olsen's involvement in the acquisition followed the firm's advice to Bushveld on the wider restructuring of its operations earlier in 2017, which saw the company spin-out its tin mining assets to AfriTin Mining; a new Guernsey-registered company formed as the AIM-listed holding structure of the demerged business. AfriTin, which listed in November 2017 having raised £4.5 million of new equity, is the only AIM quoted, conflict-free tin mining company.

The Avnel deal saw the gold mining, exploration and development company, which has operations in south-western Mali, acquired for $122 million by Endeavour, a premier intermediate gold producer focussed on assets in the West Africa region. Both companies were listed on Toronto Stock Exchange (TSX).

Mr Lane, who led on both the Bushveld and Avnel deals, also led the Carey Olsen team that advised TSX-listed Sandstorm Gold Ltd on its successful acquisition of TSX and AIM-listed Mariana Resources Limited in the middle part of last year. The Avnel and Sandstorm deals were each conducted by way of a Guernsey scheme of arrangement.

The listing of BVI-incorporated Cora Gold on AIM in October 2017 saw the company, which focuses on exploration and production of gold mine projects, raise £3.45 million ($4.5 million) to fund exploration at its flagship Sanankoro project in Mali.

According to the November edition of the Corporate Advisers Rankings Guide, Carey Olsen acts for more basic materials clients listed on the LSE than any other offshore law firm.